S&P Global Ratings: Household confidence in the lira in Turkey remains resilient

Nuran Erkul Kaya October 20, 2026 • Updated: October 20, 2026 According to the analysis published by S&P Global Ratings regarding the Turkish economy, the resilience of household confidence in the Turkish lira and the decrease in foreign exchange demand allowed the Turkish Central Bank (TCMB) to partially reconstitute its foreign exchange reserves. In this context, while household confidence in the Turkish lira maintained its resilient course throughout the year, as of September, the share of foreign currency deposits in total bank deposits remained unchanged at 38.7%, compared to the beginning of the year. On the other hand, according to S&P Global Ratings, the repercussions of the fund investigation that began in September and the liquidation of some investment funds remained limited. Although mandatory asset sales led to a sharp correction in the stock market and the liquidation of approximately $18 billion in funds, the TCMB's rapid liquidity provision and the isolating measures applied in the regulatory framework prevented "financial contagion." The fact that fund outflows largely directed towards bank deposits in Turkish lira rather than foreign currency indicates that this development did not trigger a wider loss of confidence in the Turkish lira. According to the analysis, it is estimated that the energy price shock resulting from the post-war situation in the Middle East could exert upward pressure on inflation in Turkey. In this context, it is forecast that inflation in Turkey will be at an average of 30.9% this year and 21.7% in 2027. S&P Global Ratings' "stable" view of the Turkish economy reflects the assessment that the Turkish economy can overcome the ongoing energy price shock, under the assumption that authorities continue their tight monetary and wage setting policies and do not consume foreign exchange reserves further. The growth in the Turkish economy is assessed to be at the 3% level this year, compared to the 3.7% level of last year. The growth expectation for this year due to the Middle East war is 0.4 percentage points below the institution's previous estimates. Economic growth is expected to accelerate again to 3.7% in 2027. It is estimated that the budget deficit, which was at the level of 2.6% of Gross Domestic Product (GDP) last year, will widen to nearly 3% this year, while the ratio of public debt to GDP will remain below 30%, preserving its low levels. In its latest assessment published in April, S&P Global Ratings confirmed Turkey's credit rating as "BB-/B" and maintained the outlook as "stable." The institution had postponed the Turkey assessment expected on October 16.